7 December 2009

Brewin Dolphin, one of the UK’s largest independent private client investment managers with over 130,000 clients and £20 billion under management, today called on Alistair Darling to put tackling Britain’s catastrophic pensions hole at the heart of next week’s Pre-Budget Report through the restoration of the dividend tax credit.  If this issue is not addressed, the costs of supporting Britain’s rapidly ageing population will place an insurmountable burden on the public finances for decades to come.

It is estimated that more than 13¹ million people in the UK are not saving enough towards their retirement.  According to the Pension Protection Fund (PPF), the shortfall in the UK's 7,400 defined-benefit schemes stood at £179.3bn at the end of May. By contrast, one year ago there was a surplus of £51bn. With the Government’s fiscal deficit now increasing at the rate of almost £3 billion a week and estimated to total around £500² billion over the next three years, it is imperative that individuals are encouraged to make proper provision for their retirement.

The long term costs the Government will bear as a result of Britain’s pension hole dwarfs the estimated £5 billion a year the Treasury raised by abolishing the dividend tax credit in 1997. 

Jamie Matheson, Executive Chairman, said “Britain’s pension hole is the biggest fiscal disaster facing Britain over the coming decades.  With urgent action required to bring the Government’s borrowing deficit under control, now may seem the wrong time to call on the Government to restore the dividend tax credit.  However, difficult times call for difficult measures and tackling the huge under provision of pensions is a critical component to restoring the public finances over the longer term.  The Tories have hinted that they will restore dividend tax credits when they can – so it would be encouraging to see the Government taking the initiative.

People need to take stock of their current financial circumstances and start making the necessary provisions for retirement particularly at a time when many are planning to work beyond the state retirement age of 65.  Retirement planning has taken on a whole new meaning since the onset of the recession and its impact on pension funds, savings and investments.  With careful planning people can protect themselves and their families for the future.”

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For further information please contact Charlotte Black, Head of Corporate Affairs on 0845 213 3331 

¹ Association of British Insurers' Report, 'The State of the Nation's Savings', November 2008)

² Alistair Darling's estimated Government fiscal deficit over the next 3 years is circa £485 bn. Independent analysts' figures suggest circa £590 bn (marketoracle.co.uk)